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Why
Form a Va LLC?
The initials "LLC" stand for "Limited
Liability Company," which sums up the reason why
self-employed Virginians or Virginia business owners
should form a VA LLC. "Limited Liability" means just
that - your legal liability is generally limited to the
assets held by your company. If a customer or client
comes after you with a lawsuit (unfortunately, an
extremely likely possibility in today's litigious
society), they generally cannot touch your home, your
assets nor your personal possessions when you form a VA
LLC provided you have properly formed and maintained
your VA LLC and have not otherwise personally engaged in
any misconduct.
Separation
The main reason to form a VA LLC is separation of
business assets from personal assets. Not only does this
protect your personal assets from lawsuits, but
creditors as well. Should the business fail and you need
to declare business bankruptcy under Chapter 11,
creditors can place a lien only on those assets and
monies under control of the VA LLC. This means your
family's home, car, bank accounts and other valuable
possessions are safe unless you have otherwise agreed to
make those assets subject to loss through your VA LLC
business activities.
In addition, a corporate bankruptcy will not follow you
for ten years like personal bankruptcy. It's easier to
make a fresh start, because while corporations may enjoy
many "human rights" today, they have been freed from
many human responsibilities. A bankruptcy on record for
an LLC that has been dissolved (essentially allowed to
"die") has no bearing on a credit file opened should you
decide form a VA LLC for a new business.
Raising Capital
When you form a VA LLC, you make it possible to raise
money for the business by selling shares to investors.
This is a bit different than what the big players on
Wall Street do when they sell stock in their companies;
a VA LLC typically sells "membership units,"
representing ownership in the company. In the end
however, it accomplishes the same goal: attraction of
new capital for growth, expansion and (if you are very
ambitious) mergers and acquisitions.
Tax Benefits
It's not fair, but currently it is the law: if you work
for your money, you pay higher taxes than if your money
works for you. While there is a small chance this may
change in the coming years, for the present, when you
form a VA LLC you enjoy more tax advantages that are
simply unavailable to employed individuals.
Immortality
Although an LLC under current laws is treated like
humans and granted human rights (if not
responsibilities), a VA LLC is virtually immortal under
current law. This means that when you form a VA LLC, you
create a separate entity that can be sold, transferred
and bequeathed to heirs when the original owner(s) pass
on.
Credibility
As a business, you enjoy greater credibility when you
have "LLC" after your name. Admittedly, it's an issue of
image and perception, but is not a bad thing when
demonstrating to potential customers or clients that you
are a serious businessperson. In the end, this may be
the best reason of all to form a VA LLC.
Form an LLC
Ask a Question of Contact Virginia Business Formation
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